Archive for the ‘Innovation’ Category

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Evolution and Revolution in Insurance

Friday, May 10th, 2013

Matthew Josefowicz

Insurance Networking News has a nice write up of the Analyst Panel from the ACORDLOMA Forum this week.

I was glad that Chris McMahon captured this quote from me on evolution and revolution in the insurance industry, driven by IT changes:

“There is an evolutionary imperative and — closer than some companies think — a revolutionary imperative,” he said. “The evolutionary imperative is about efficiencies and streamlining processes, using third-party data wherever possible to accelerate the underwriting and claims process and companies are looking at their core systems to make sure that they can support those incremental changes that are coming shortly,” he said, including fully-automated underwriting, which is expanding across lines of business.

But he also spoke of structural changes that could occur. “There is a huge potential transformation in terms of the capital markets ability to access risk. The current configuration of reinsurer, broker, primary broker, corporate — all of that structure was designed to solve an information management problem that at its core is not an information management problem any more. Now, that [organizational structure] is held in place by cultural inertia, the regulatory environment, accepted behavior and experience. But it was developed to meet an absolute necessity, and the absolute necessity that it was developed to meet is no longer there.”

The full article is online here, and a my recent INN column has an expansion on some of these ideas.

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ACORD/LOMA Forum 2013: Novarica on Growth, Modernization, and IT Impact

Sunday, March 3rd, 2013

Matthew Josefowicz

Chad, Karlyn, and I will be speaking at a number of this year’s ACORD/LOMA Forum, on topics ranging from modernizing your distribution channels to preparing insurers for new technologies and business strategies in 2014. If you’re planning to attend ACORD/LOMA this year, please let us know.

Our sessions are:


Tuesday, May 7

  • 2:15-3:30 PM. Creating Market Expansion Capabilities: Capitalizing on New Growth Opportunities (Karlyn Carnahan)

There has never been a better time for insurers to develop a strategy for capitalizing on new growth opportunities. The marketplace abounds with opportunities for carriers to offer critical products and services to commercial and private businesses. This panel discussion will cover how to get started on setting up your business for successful expansion, outline the benefits of industry partnerships and provide a comprehensive overview of the technology available to successfully expand your business to serve the markets you want to serve.

  • 2:15 PM – 3:30 PM e-Signatures: Implementers Discuss Their Experiences and the Benefits of Adoption (Rob McIsaac)
Rob McIsaac participates in a panel with Genworth, ESRA, and Warwick on e-Signatures benefits and challenges.

 

Wednesday, May 8

  • 8:30-9:30 AM. Evolving Your Distribution Channels: Modernization That Matters (Karlyn Carnahan)

Insurance isn’t purchased the way it was a decade ago. Unfortunately, insurers have maintained static distribution channels with little potential for significant growth. So, how can insurance distribution channels change with the times? For insurers, the evolution of distribution channels is modernization that matters. Attend this session to learn how automation can help distribution channels roll with the punches and improve producer management at the same time.


  • 10:00-11:15 AM. Analyst Panel: What is New in 2013 and What Should We Expect in 2014? (Matthew Josefowicz)

While many new technologies and business strategies are discussed during the event, is anything really new that is changing the industry? This panel will present point of views from the analysts on what is new this year and how much change is really happening within the industry. Panelists will discuss the major industry changes of 2013, whether insurers are really innovating, and what we can expect in 2014.

  • 1:15-2:15 PM. Core Policy Transformation: Real-World Insurer Stories (Chad Hersh)

This interactive session brings together technology, consulting and data conversion industry experts to discuss the different strategies insurers are taking to fundamentally improve their business. Hear real-world stories of insurance transformation from the teams that are executing on these projects. Topics will include understanding the compelling business reasons to transform, including product agility, excellent customer service, and reduced cost; and how business context impacts transformation strategy and business value of modern application architecture in a changing insurance value chain.

  • 2:30-3:30 PM. IT Initiatives That Deliver Business Impact (Matthew Josefowicz)

This panel of insurers presents case studies of real-life IT projects that delivered business impact by adopting new practices, delivering quick hit new capabilities, expanding the capabilities of existing systems, or transforming entire platforms. Learn how these insurance IT leaders worked with their business partners, overcame challenges, and delivered real business impact.

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Top Five Disruptors in the Next Five Years for Insurers

Tuesday, January 29th, 2013

Matthew Josefowicz

While managing short-term business needs is a critical role for insurer CIOs, another important part of the job is keeping an eye on the horizon to help insurers prepare for change. We recently contacted 70 insurer CIOs to ask them to look five years out and consider the biggest potential disruptors to their businesses. We also asked what steps they were taking today to prepare.

Most of the responses fell into into five major categories: regulatory changes, shifting market needs and expectations, the financial environment, increased catastrophes, and the emergence of big data and the increased importance of analytics.

As Yogi Berra famously said, “It’s hard to make predictions, especially about the future.” But for insurers, a highly probable future has more regulations, more demanding consumers, more challenging investment markets, more catastrophe losses, and much more data to be consumed, managed, and analyzed effectively.

For more, see our new report here: http://www.novarica.com/top_5_disruptors/

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The Future is Now…

Friday, September 21st, 2012

Chad Hersh

Earlier this week, I gave a presentation about the Future of Insurance, which discussed potential disruptions from non-traditional players like Wal-Mart. My slide said:

  • How many times do we have to hear about companies like Wal-Mart considering selling—and manufacturing—insurance before we believe it will happen?
  • What are you doing to prepare?
  • Think about it…
    • In the Wal-Mart example, distribution would be completely upended with an agency in every store (they did it with optical care)
    • They have a pharmacy in every store that could do life paramed exams
    • They believe in taking out costs not for the sake of increasing profits but for lowering prices; imagine the impact

Then this morning, a friend sent this tweet of a display from Wal-Mart:

Sometimes, you don’t have to wait long for the future to arrive!

(Picture Courtesy of @tadeyoung)

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Social Media Strategies for Independent Agent Distribution

Tuesday, July 10th, 2012

Karlyn Carnahan

Novarica’s latest research report, Insurer Social Media Strategies for Independent Agent Distribution, addresses the use of social media by insurers with independent distribution. Surveying insurers that write through independent agents as well as independent agents themselves, we looked at social media usage rates, the different rates for different uses, and the preferred platforms (especially Facebook, Twitter, and LinkedIn) for various uses.

We found that a striking majority—more than 70%–of the insurers we surveyed have some presence on Facebook, Twitter, or LinkedIn. However, 40% or more have no official social media policy in place—a fact that could create compliance risk and limit the company’s ability to capitalize on social media activity.

Additionally, about 30% of insurers responded that they use social media for one-to-one communication with both agents and policy holders. This suggests that some of the critical communication that used to take place via telephone or email is migrating to social media platforms. This data is notably split by age, as 25% of agents under 40 report using LinkedIn to communicate with specific underwriters at their insurers, double the percentage of those over 40. More communication may migrate to social media platforms, then, as baby boomers move into retirement and are replaced with GenX and Millenials.

The report concludes with a discussion of six ways insurers are supporting agents’ social media efforts, as well as four key recommendations to ensure insurers best leverage social media within their distribution strategies. Insurers that write through independent agents must understand that changes in communication platforms and behaviors will affect their most critical capability: their ability to manage relationships and communicate effectively with their distribution partners.

A free preview of the report is available here.

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The Economist on Big Data in Insurance

Wednesday, June 6th, 2012

Matthew Josefowicz

The Economist has a new article on the transformational role of 3rd-party data in insurance, Insurance data: Very personal finance. It’s a good article and worth a look just to see how this issue is being presented in the general business press.

For more on this, see our new reports on:

and our blog posts on:

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Re-Imagination of Nearly Everything

Thursday, May 31st, 2012

Matthew Josefowicz

Mary Meeker of KPCB put out her annual “State of the Internet” presentation yesterday. If you haven’t already checked it out, it’s online here.

The most compelling section for me starts on slide 29, “Re-Imagination of Nearly Everything – Powered by New Devices + Connectivity + UI + Beauty – Where we are now…” Most of the slides in this section focus on media & content businesses, personal content management (photos, notes, scrapbooking), and similar areas that have been transformed by the ubiquity of the internet and mobile connectivity, but there are also slides on business collaboration, payments, and other areas.

For example, slide 68 is the re-imagining of personal borrowing and lending, comparing the bureaucratic bank lending process to the streamlined and flexible technology-enabled peer-to-peer lending process.

While Ms. Meeker doesn’t offer a slide on insurance, many of the slides in the Re-Imagining section spoke to coming changes in the insurance market, and resonated (for me) with my recent post on simplifying the customer experience and preparing to manage new levels of complexity in data and operations.

Slide 85 is titled “Magnitude of Upcoming Change Will be Stunning – We are Still in Spring Training.” While the focus is on info tech and internet businesses, many of the points Meeker raises here will have a game-changing impact for insurers, including

  • “Fearless and Connected Consumers”
  • “Unprecedented combo of Focus on Technology AND Design,”
  • “Beautiful/Relevant/Personalized Content for Consumers”

Insurers need to be actively planning for how they will adapt to this rapidly changing world.

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Simplify the front, complicate the back

Friday, May 18th, 2012

Matthew Josefowicz

Two major information technology trends related to complexity are changing the game for insurers.

On the one hand, complexity is increasing dramatically: Increased data volumes, proliferation of data sources, new abilities to finely segment target markets, new abilities to microrate based on constellations of risk characteristics, multi-channel sales and service expectations, and service that takes place in public on social media platforms with direct brand impact.

At the same time, customers’ tolerance for complexity is dropping. Fewer questions, simpler products, more frictionless transactions are required to capture customers’ attention and retain their commitment.

This was brought home to me at a conference this week. One of the outside speakers was a prominent technology professional in his late thirties with a young child. During a lunch conversation with a table full of industry veterans, he asked why, when he was posting new baby pictures on Facebook a few years ago, there was no “click here to buy life insurance” button that popped up. When he was informed of the actual process of buying life insurance from a top tier insurer (an agent will follow up on your lead, much of the process will be paper-based, etc), you could see him mentally put “buy life insurance” at the bottom of his “things to do eventually” list.

The industry may say “we can’t sell our product through a simpler process” but the market is saying “we don’t want that product if the only way to get it is an inconvenient process.”

Which brings me to my point – simplify the front, complicate the back.

Simplify the front means be ruthless in looking for opportunities to take friction out of the sales and service process, even if that means product changes.

Of course that doesn’t mean sacrifice risk quality. But greater analytic capabilities can provide new opportunities to rethink product attributes and underwriting requirements based on real data about profitability and predictive value, not received wisdom.

Complicate the back means create the communication, data, analytic, and process management capabilities to support a simplified front. This will mean building and integrating new capabilities from multiple sources, including internal teams, external providers, software vendors, infrastructure providers, web 2.0 platforms, and data services providers. It will mean collaboration and innovation and agility.

It’s not going to be easy, and its not going to be fast. But the insurers that can do it are going to be the ones that win.

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Novarica Research Council Impact Awards 2012

Monday, April 2nd, 2012

Here’s an overview of our Impact Awards program. Deadline for information submission is June 30. Download the submission form here.


Novarica Research Council Impact Awards Information

The awards will be judged by all 300 members of the council, making them the largest peer-jury awarded recognition in the industry.

Nominees from for the award will be selected from a collection of case studies that we’re currently working on by a nominating committee of Research Council members, including Andy Wood (Wilton Re), Dan Simpson (Trustmark), Eric Bulis (SBLI USA), Larry Fortin (Millers Mutual Group), Mark Berthiaume (Chubb), Pete Moreau (Amica), Piyush Singh (Great American Insurance Company), Reuben Broadfoot (LifeMap), Sal Abano (Tower Insurance), Stuart Tainsky (PURE), and Tim Billow (ING).

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Blurring the line between online and offline

Monday, March 12th, 2012

Matthew Josefowicz

There was an interesting article in the New York Times on Friday about younger shoppers in department stores preferring to interact with iPad apps rather than salespeople to get additional information and guide their purchasing.

While this may be horrifying to traditionalists like the MIT professor in the article who claims “that shoppers lost something intrinsic to the human experience when they avoided salespeople,” the money quote is this one:

“There’s a tendency to believe that if you talk to somebody, they’re going to waste your time or sell you something you don’t need,” said Ricardo Quintero, global general manager of market development for Clinique, which uses touch screens at its counters. “It’s taking the pressure off.”

In the age of information scarcity, commissioned sales people were a valued information source for customers — because they were the only accessible information source. Now, in the age of information super-abundance, there are alternative ways for customers to get information, ways that are more responsive, and have more information available than the best informed salesperson. It turns out many customers prefer not to interact with a channel that has incentives to sell them something they may not really want or need.

The question for insurers is, how are they going to adapt their sales experience to attract these buyers?

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